A survey of nearly 650 farmers by Federated Farmers has found a major turnaround in confidence levels.

The results back a Rabobank survey this month which also detected lifted confidence by farmers from earlier in the year.

Federated Farmers president Bruce Wills said farmers were showing a lot more optimism in both the wider economy and individual farm prospects

"You could say farmers are in recovery mode but this bounce back comes off a low base. There is still a large gap in the sentiment of dairy farmers when compared to the other farming sectors."

This remains a turnaround from six months ago when farmers were fairly negative about the economy and "very pessimistic" about their own profitability, he said.

"This was particularly the case for sheep and beef farmers. In contrast, dairy farmers were feeling more optimistic than they had been at this point last year, thanks mainly to better dairy commodity prices and growing conditions."

Wills said last summer's drought - the worst in 70 years and estimated to have cost the economy about $1.5 billion - would still be on the minds of farmers.

The survey found they remain concerned about weather and its effects on pasture and feed, he said.

"Last season's drought will make the new 2013/14 season a challenging one for many farmers. I cannot hide the fact that it will be difficult for some in particular.

"Despite these concerns farmers are entering the new 2013/14 season with a lot more optimism. Dairy farmers remain the most optimistic industry group with very strong survey indicators and this isn't really that surprising, given current payout forecasts and expectations of a recovery in production."

The survey indicated sheep and beef farmers were feeling more optimistic even if it was off a low base after a tough 2012/13 season.

Regulation and compliance costs continue to be a concern for farmers, mostly related to regional council plans around water quality.

Farmgate and commodity prices and the weather were the next most pressing issues.

Wills said the gap in sentiment between dairy and the rest of farming remained large and highlighted the need for reform in the red meat industry.

Main results:

* 34.2 per cent of surveyed farmers expect general economic conditions to improve over the next year

* 33.7 per cent expect their own farm's profitability to improve over the next year